Professional Services firms seek new growth opportunities
A growing number of professional services firms are ready to seek new growth opportunities.
With costs increasingly under control, a growing number of professional services firms are ready to seek new growth opportunities, according to the latest Commonwealth Bank Future Business Index.
The Index covers a wide-ranging snapshot of Australia’s midsized businesses and, the March quarter report saw confidence in the Services industry decline from a relatively optimistic 13.3 points to a more cautious 7.8. The Services category includes legal practitioners, accountants and other professional services firms, along with more general business services, such as IT and advertising.
Although confidence eased, the Index shows many firms in the sector expect an improving global economy and positive government decisions to drive better business conditions, despite concerns over the potential impact of a tight federal budget. As a result, a growing proportion are ready to switch their focus from cost management to growth.
Costs under control
At a time when professional services firms are under intense pricing pressure, many have been focused on reducing costs, either by outsourcing, reducing office leasing expenses, or even trimming staff. Now there are indications that this relentless focus on cost management has borne fruit, with 68% of Services organisations saying costs are well controlled.
That doesn’t mean cost pressures are at an end. Many organisations are still concerned about the potential for higher costs — especially wages, as competition for skilled staff remains intense. 47% of Services firms say they expect wage costs to rise in 2014, although few expect headcount to rise.
Seeking growth opportunities
Nevertheless, a growing number of organisations have begun to shift their focus from cost management to growth, with 45% now saying that growth is their main priority, up from just 34% six months ago.
Equally revealing was the response when firms were asked to name their biggest challenges and opportunities over the next six months. For Services firms, the number one challenge was growing the business, whilst acquiring new clients presented the best opportunity to achieve same. That suggests an increasing number of firms are ready to capitalise on a stronger financial position by seeking new client acquisition-led growth opportunities over the year ahead.
Almost half of the firms surveyed expected revenues to increase over the next six months, while 36% said business conditions were likely to improve. Among those who predicted an improvement, 30% cited government decisions as a key driver of the better outlook. Yet Services firms are also among the most concerned about the potential effects of the upcoming federal budget, with 35% saying they expected a negative impact.
Get more industry insights from the latest Future Business Index report. To find out how Commonwealth Bank can help your business, contact your Relationship Executive or call us on 1800 019 910.