When I attended my first Xerocon in 2013 after five weeks with Xero, I immediately sensed an air of excitement that resembled what I imagine a revival or a movement would be like. The same feeling arose this year as I watched accountants and bookkeepers flow into the Viaduct Events Centre, ready for what Xerocon New Zealand 2014 would have to offer.
In my keynote this morning, I referred to Simon Sinek’s ‘The Golden Circle’, which talks about how great leaders inspire action. Most organisations know what they do and how they do it, but very few know why. It’s not just about making money, it’s about a purpose and a belief, and that’s what I’ve come to see in Xero. We’ve got a purpose, a cause and a belief in what we do and our partners believe it too.
New Zealand strategic update
Since I joined Xero as General Manager New Zealand in January 2013, we’ve seen real growth. We had 73,000 customers and 240 employees locally, and today we have over 90,000 customers and more than 350 employees here in New Zealand. We also have almost every accounting firm in New Zealand partnered with us in some way – 2,500 in total.
Today, I focused on some trends and insights around the generation gap that has emerged within the accounting industry, and hence the importance of succession planning for New Zealand firms.
According to CCH Business Fitness GBU 2013, revenue for firms in New Zealand has been reducing since 2011 and a further 8% in the last year. This is due to the number of clients per partner dropping by 7%; along with a 15% decrease in the client base. They’ve hypothesised a few reasons including the facts that small businesses in New Zealand have been declining since 2009; an increasing number of clients are possibly preparing their own tax returns; clients are moving firms and interestingly, accountants and bookkeepers are becoming much more selective, choosing not to work for unprofitable clients.
Succession planning is a hot topic and one I want to focus on. According to NZICA statistics, 35% of members are aged over 50, meaning there will be a mass exodus of partners in the next five to 10 years. The majority of firms don’t have a plan on how to deal with that, but they need to get moving. As that generation exits the industry, the next phase of decision makers will arrive who are more tech savvy and will demand the benefits of the cloud. Are our accounting firms preparing their businesses for this?
A research project commissioned by CCH iFirm looked at the attitudes of small businesses and accountants towards cloud computing. Overall, the current uptake is quite low, but what’s interesting is the intentions to shift: 60% of accountants are considering the uptake of cloud in the next two to three years and it’s even higher for those younger SME owners. If accountants fail to embrace the cloud, 72% of small business owners aged between 18 to 34 have said they will consider looking for a new accountant, meaning accounting firms risk losing an entire generation of small business clients if they don’t adopt cloud as a matter of urgency. Like Gerhard said yesterday, you can’t worry about this in three to four years time or you’ll be left behind, so if you plan to sell the practice, and you’re not in the cloud, who are you going to sell to?
Google & you
Cloud has been a key theme of Xerocon 2014 and Tony Keugsen, Country Manager of Google New Zealand, added some great insights around the impact cloud has had on business.
We’ve all witnessed how technology has changed over the past ten years – things have gone truly mobile. We can work anytime, anywhere, and on any device. With cloud, we have flexibility and freedom.
Tony referred to the Standard & Poors 500 over the past 50 years, noting it used to take a business 75 years to make it to that level. Now the average age of a business making it to S&P500 is 10 years old, so he said the next business to make it probably hasn’t even been born yet!
Talking about the close correlation between collaboration and innovation, Tony says the more chance we have to collaborate, the more creative and innovative we will become. That creativity and great thinking matters more than the size of your business, he said.
Tony also touched on the importance of good technology making people happy in the workplace. We’ve noticed that at Xero too, and we know how productive our people can be when they’re happy. While technology was once back of mind for business leaders, it is now at the forefront – if you want your business to thrive, look to the cloud and see just what the possibilities are.
Special purpose financial reporting framework
Finally making it to Auckland for Xerocon after a foggy day in Wellington, Dr Michael Fraser, Director – Technical Services at NZICA gave us a whirlwind tour of financial accounting reforms and NZICA’s development of a special purpose financial reporting framework.
Michael talked about the Financial Reporting Act that comes into effect on 1 April 2014, meaning small to medium practices will no longer be required to produce general purpose reporting frameworks – but he said they’re not off the hook. The IRD will still require annual reports and financial accounts, though the information they need is much less and far simpler.
That’s where the special purpose financial reporting framework comes in. Two years in the making, NZICA used NZ “Old” GAAP as a starting point, worked hard to develop the framework, talking to industry experts and forming a working group and a technical sub-committee. It now comprises 27 chapters, 102 pages, and three different sets of comprehensive financials: products, services and agriculture.
Michael will now be heading along on a roadshow around key regional locations in New Zealand, alongside NZICA, the External Reporting Board and Inland Revenue, talking about the new requirements and how small to medium businesses should respond.
ASB, accountants and making business easier
It was a real pleasure to have Steve Jurkovich, ASB Executive General Manager, Commercial & Rural, on our Xerocon keynote schedule this year. Our strategic partnership with ASB represents a key part of Xero’s future, and it was wonderful to hear why ASB chose Xero and how the partnership will benefit each of our customers with real-time data, multi-currencies, real accessibility and collaboration.
ASB is preoccupied with delivering unbeatable services to its customers and we like that. He said the cloud and Xero – particularly Rod’s stern words! – has disrupted the way ASB thinks about working with customers. It has the determination to make its customers lives as easy as they can be by being dynamic and agile. Together, ASB and Xero are “opening the innovation pipeline”, as Steve puts it. It joins with us in the desire to untap the opportunities available for New Zealand businesses to sell its products and services to the rest of the world. Together, we’re making it happen.
The big reveal…
Following another round of streams throughout the afternoon, we prepared for the big surprise to round off the end of Xerocon New Zealand 2014. We are hugely excited to announce our sponsorship of Olympic kayaking gold medallist Lisa Carrington. Lisa will join the Xero team part-time as she builds her kayaking career, learning about marketing, social media, sales and customer support, giving her options for her future career after kayaking. We’re so excited to have her join our growing team! Find out more from Lisa on Xero TV.