Who is involved?
You might read the announcement and interpret it as H & R Block wanting to pivot their business model to buy tax practices (maybe your tax practice), and you would be right, yet only partially correct. The more complete answer is that, like many other enterprising companies, they are trying to take advantage of the huge transformation occurring in the small business market; the move toward larger, vertically integrated accounting and tax practices utilizing 100% cloud technologies and end-to-end workflow.
This is already taking place globally, such as in Australia, the UK and other countries. We are behind in the US but that will change soon. The US Market is large, with enough economic punch that we tend to believe we can chart our own course. That used to be the case, but the economy is global now and we have to pay attention to what is happening outside the U.S.
To address this, H&R Block has recruited the services of an experienced accounting profession veteran to spearhead their initiative, Jennifer Katrulya, who is very well known as a speaker, business leader and visionary to many of our readers. Her company, BMRG, provides operational and strategic consulting expertise to accounting firms that are already making, or have made, the transition to vertically integrated cloud technologies. She is a highly regarded thought leader in the industry and will immediately bring credibility to what H&R wants to accomplish.
What is the announcement regarding?
H & R Block does tax returns, right? Either through their storefront locations or retail software. They primarily service the individual tax return market, and perhaps quite a few Schedule Cs and pass-through entities, right?
That is correct in all cases, although that is only part of the picture. The next part, the big part, the sweet spot if you will, is the evolution of Client Accounting Services Model into the Small Business market. H&R Block is making a strategic decision to build a pipeline of accounting firms who have made the decision to adopt and implement modern
When will this happen?
This change is happening today! We all know about cloud accounting technologies like QuickBooks Online, Xero, Wave, FreshBooks, Intuit Online Payroll, Intuit Tax Online, and so forth. The next stage is the natural evolution to the Client Accounting Services Model for accounting firms who want to scale an accounting practice, to work remotely, add staff remotely, to service clients in multiple geographies, to exploit the changes occurring in the industry and most important, of all, to remain relevant and stay in business.
Where will this happen?
I believe that we are already seeing many companies in the US entering this market: first the
Why is this happening?
That is the best question yet. Answering this question correctly means you pass go, you collect $200 and you get a gold Star. Answering the why question gets to the very heart of why you went into the accounting business in the first place. I believe most of us went into the accounting and small business consulting business because we believed we had something significant and of value to bring to small business customers. We saw an underserved market, we developed expertise to serve that market, and we started offering this expertise to Customers in our local area.
Today we all need to spend a great deal of time thinking about how we are going to address the massive changes that have already occurred in the tools we use to service our customers, and the resulting changes to the business models entering the market. The move by H&R Block will certainly bring more options to accounting firms targeting small businesses, and that is a very good thing for all of us. We all need to pay close attention to the competition entering your market, because it is likely developing from one of these newer entrants, and not from traditional firms. I predict that if we are not mindful and anticipate these changes, one or more of these firms will come into our local market, and offer a more complete and more effective service to our customers. One day our customer, tomorrow not!
What Should I Do?
This is critical and it requires a lot of time spent thinking about how this affects your business and how you should proceed. You have to decide what path your firm will take as a participant in this natural order evolution. It is beyond the scope of this article, but this question is one that must be addressed thoroughly by all of us. I will have lots more to say about this in upcoming articles.
How about dealing with H&R Block? If you want to evolve your accounting practice into one that looks like a BMRG practice, then reach out and find someone who is already in the BMRG business model and talk to them. Ask they why they elected to join the program, what their journey has been like, and most importantly, what results have they seen as they aspire to build the Firm of the Future. Then you can decide if you want to work with them, or if you want to work this out on your own. If you just ignore it, you may be left behind!