female accountant looking at data on a computer screen
Tax & Accounting19 June, 2020

Looking at past economic downturns, what lessons can we learn?

Steering through the impact COVID-19 continues to make on your practice is now becoming a long-term strategy.

As you answer the question, “Where do we go from here?” and navigate your way back to some resemblance of normality, Wolters Kluwer is at your side with the information and resources you need.

Lead Product Manager for Compliance and former practice partner, Dean Shepherd, says there are lessons to be learned from history to ensure your practice comes out on top.

Before you go forward, cast your mind back

While people and organisations are still contending with the immediate and urgent concerns of COVID-19, some are also contemplating what the post-virus business landscape will look like. Is a rapid economic recovery likely? Will the business and economic repercussions be with us for years to come? What will be the new normal?

Looking back at previous economic downturns and how forward-thinking firms were able to adapt and move quickly to benefit from the upsurge in growth that came afterwards, is an interesting perspective. Comparing this to the way that more conservative firms reacted, and how they were slower to recover, tells an interesting story.

As a former accountant, and current technologist, my lens tends to be focused on the landscape 12-36 months from now, always trying to predict future trends and what processes and relationships might look like so we can build software solutions to solve tomorrow’s problems today.

When I think about the new normal, I’m thinking about a post-coronavirus world. How will that world compare to a pre-coronavirus world and, more specifically, will the world of tax and accounting in the UK have changed?

My accountancy career began in 1996/97, the same year self-assessment went live and, to me, it seemed like a time of great opportunity. The UK economy was comfortably out of the early 1990s recession that saw unemployment hit 10% and interest rates reached close to 15%, something inconceivable to many homeowners today.

The market for accountancy services was buoyant, as businesses recovered and many new businesses emerged. It was, after all, the start of the internet age and the dot com era.

Accounting practices could be forgiven for thinking they did all the right things at that time to ensure a prosperous recovery. The reality is, many didn’t. Don’t you want your practice to be one of the successful ones?

In the early 1990s many practices understandably put recruitment on hold throughout the recession, with many cancelling graduate programs. A necessary move for cashflow, but this created a skills gap. There was a distinct shortage of part-qualified and semi-senior candidates.

It is very expensive to have fully qualified staff doing the work normally undertaken by part-qualified staff and semi-seniors. Firms with a little more agility were able to cherry pick the best candidates during the recession and were primed for growth in the period of economic recovery.

Lesson learned: Don’t think about the roles you need fulfilled today. Try to think about the roles you will need in a period of growth. Will you be taking on lots more new business start-ups rather than established businesses? Consider the concept of a more flexible workforce, better able to expand and contract in times of high and low demand.

If you want to hear more, watch Dean Shepherd in an informative webinar where he will continue to share his experiences in practice and the lessons to be learned from history to ensure your practice comes out on top. Click here to watch the webinar.

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